That sprite is pretty shitty, just showing how it may look.
Flare gun shot is really bright, though it lasts for just a few seconds. Probably can be used to check dark areas from safe distance.
Way too OP
To prevent people from shooting it in everyone's face reloading the flare gun would need some fiddling with. To reload it you have to right click, expand it, take out the shell, then load the flare, rightclick it again to put chamber back on it's place. Or just the L6 SAW reload.
Where do you get them?
I'd say one Flare Gun should spawn at Gateway, maybe CE or maybe miners should get some. One or maybe two of these can be found in emergency crate ordered by cargo.
Ammo is made either with autolathe or tablecrafting(some metal and flare, maybe wires).
What happens when you shoot someone with it